Question : 21) Suppose that capital costs $10 per unit and labour : 1384209

 

21) Suppose that capital costs $10 per unit and labour costs $5 per unit. For a profit-maximizing firm operating at its optimal factor mix, if the marginal product of capital is 50, the marginal product of labour must be

A) 10.

B) 20.

C) 25.

D) 50.

E) 100.

22) Suppose that capital costs $6 per unit and labour costs $3 per unit. If the marginal product of capital is 3 and the marginal product of labour is 6, the cost-minimizing firm should

A) employ more of both capital and labour.

B) employ less of both capital and labour.

C) employ more capital and less labour.

D) employ less capital and more labour.

E) not change its current factor use.

23) Suppose that capital costs $6 per unit and labour costs $3 per unit. If the marginal product of capital is 12 and the marginal product of labour is 6, the cost-minimizing firm should

A) employ more of both capital and labour.

B) employ less of both capital and labour.

C) employ more capital and less labour.

D) employ less capital and more labour.

E) not change its current factor use.

24) Suppose that capital costs $50 per unit and labour costs $20 per unit. If the marginal product of capital is 100 and the marginal product of labour is 30, a cost-minimizing firm should

A) employ more of both capital and labour.

B) employ less of both capital and labour.

C) employ more capital and less labour.

D) employ less capital and more labour.

E) not change its current factor use.

25) Suppose that capital costs $100 per unit and labour costs $40 per unit. If the marginal product of capital is 200 and the marginal product of labour is 60, a cost-minimizing firm should

A) employ more capital and less labour.

B) employ more of both capital and labour.

C) employ less of both capital and labour.

D) employ less capital and more labour.

E) not change its current factor use.

26) If a firm is using labour and capital such that the MP of labour is two times the MP of capital, and the price of labour is four times the price of capital, the firm should ________ in order to minimize its costs of producing its output.

A) increase capital and decrease labour

B) decrease both capital and labour

C) decrease capital and increase labour

D) increase both labour and capital

E) not alter its present factor mix

27) Suppose that capital costs $8 per unit and labour costs $4 per unit. For a profit- maximizing firm operating at its optimal factor mix, if the marginal product of capital is 60, the marginal product of labour must be

A) 10.

B) 20.

C) 30.

D) 90.

E) 120.

28) Suppose that capital costs $10 per unit and labour costs $4 per unit.  If the marginal product of capital is 50 and the marginal product of labour is 50, the firm should ________ in order to minimize its costs of producing its output.

A) employ more capital and labour

B) employ less capital and labour

C) employ more capital and less labour

D) employ less capital and more labour

E) not change its current factor use

29) Suppose a firm employs two kinds of inputs, capital at $100 per unit, and labour at $25 per unit. If the marginal product of capital is 50, then the firm should ________ in order to minimize its production costs.

A) employ more capital and less labour

B) employ more labour and less capital

C) employ more labour and more capital

D) not change its current factor use

E) There is insufficient information to make a recommendation.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30) Refer to Table 8-2. As this firm switches from production method A to production method G, production is

A) moving farther and farther away from cost minimization.

B) becoming more capital intensive and less labour intensive.

C) becoming more profitable.

D) becoming more labour intensive and less capital intensive.

E) remaining at a cost-minimizing level of output.